Market Report

Sorting turns profitable again

Tilburg, June 24th, 2018

In fact it is only mixed paper and kls (occ) that are lacking behind in price movements. The limited access to China has worldwide led to stock building of card board due to uncertainty if the 0.5% maximum contamination could be achieved or because recovered paper processors did not want to sell as prices are too low. The latter may look strange, but there are still many regions in the world where recovered paper is collected by people who make a living of this activity. When that is not possible anymore, they are obliged to do something else which will jeopardize collection. Reason why other players in the chain keep the price for these collectors relatively high which means that selling at today’s market prices can lead to serious losses. So better to keep on stock and wait for better times. But will these come ? The very high export prices for clean occ, price differences with local prices have reached now € 50 to € 60 per ton, and also the very high Chinese local price should normally move away enough in export. However, that is not happening. Big Chinese buyers have difficulties to find sufficient clean occ. And then there is the resistance of processors to take the risk and further on the import licenses are still playing a role as well. Considering the issued licenses so far, the outlets in China are still reasonably well. But will it stay like this, as when will new licenses be issued and for how much volume ? Also, it cannot be excluded that other Asian countries will follow China’s example with regard to import restrictions. For plastics it is going already in that direction. Restrictions in countries that were found as alternative for China have been announced or already have been implemented. Better not think about what it means when it will happen with recovered paper as well. But the Dutch saying is  ‘man suffers most of the suffering that he fears’ and if it was bound to go that way, there are no signs of it at all yet. Demand remains very strong with exception of some ‘difficult’ grades. Next to all middle and high grades deink news and pam is sought after and (council)mixed paper as a result of that. Price differences between mixed paper and occ on one hand and deink news and pam on the other have not been so wide since decades. So it is interesting to sort. (Who said that sorting would never be profitable anymore?) . And the sorting margin might even get wider. As won’t the price of mixed paper be capped by the available occ, reason why the price difference locally between mixed paper and card board is basically non-existent ? Although the low card board price is a disadvantage for sorters, the big margin compensates for that. In short, we have a market we have never experienced before and certainly not without challenges, but much better as we had over the last years.


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Imports China halved this year

Imports of recovered paper into China were down again in April. As in previous months only half was imported compared to the volume in the same month of April last year: 1,19 million tons. In the first four months of this year, imports totalled to 5,12 million tons, which is 49% less than in the same period of 2017. With now almost 11 million tons of import licences issued, using these does not seem to happen rapidly. Not surprising. Forst there was the big uncertainty about what would become available and when, thereafter orders have to be concluded and shipments arranged. Depending on country/region of export the transition time is than 5 days to 5 weeks. Imports will increase surely in the coming months, unless Chinese buyers are not capable to find sufficient clean grades. Also the import from the USA has put up barriers. Now that it is clear that via Mexico and Canada export continues anyway, this will probably normalise quickly.

Price indication

Price indications in Europe for low grades of recovered paper, sorted, baled and ex-works are now between € 50 and € 140 per ton. These prices are depending on quality, available volume, region and loaded weight.

Click here for the price chart, with prices of the last 10 years.

The price chart gives an indication of the price of mixed paper in the Netherlands free delivered mill over the last years.  Scrolling over the top of the colums gives the exact price indication in Euro's per ton.
To view the price chart completely, please click and hold on the price chart after opening and move cursor to left or right to see all available years/months